Moody’s could downgrade Sasol

Moody's Investors Service said it placed all global scale ratings assigned to Sasol Ltd. and the senior unsecured notes rating of Sasol Financing International Ltd. under review for downgrade.

The action follows the potential weakening of the South African government's credit profile, in particular in the country's institutional, economic and fiscal strength, as captured by Moody's recent decision to place South Africa's Baa2 government bond ratings on review for downgrade.

Sasol's cash flow generation will remain heavily reliant on cash flow generated from South Africa until 2018 when the Lake Charles Chemicals Project (LCCP) – U.S. ethane cracker – commences production and begins to generate cash. Currently, the company generates around 60% of its total operating cash flow– including joint ventures and associate contributions– from South Africa.

Moody's said it also takes into account the geographic differentiation of free cash flow, where South Africa will continue to consistently generate positive free cash flow over the next three years.

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